Which of the following best explains why raising the required reserve ratio
results in a decrease in the money supply?
O A. When the required reserve ratio is high, banks have less incentive
to give loans because they make less profit on these loans.
O B. When the required reserve ratio is high, the inflation rate goes up
and people spend less money.
C. When the required reserve ratio is high, banks charge higher
interest rates that make loans less affordable to many people.
D. When the required reserve ratio is high, banks must loan out a
smaller portion of their reserves, resulting in fewer loans.